The future of TV combines the power of linear and OTT

Parminder Singh, the chief commercial officer of Singapore’s largest media broadcaster Mediacorp, warns against dismissing over the air broadcasting.

10 years ago, TV viewing for a typical family involved them gathered in front of their console TV watching their favorite shows over a meal. Today, TV nights look rather different, with members of the same family in different rooms, watching different programs on their different devices. For TV networks, the good news is people still watch content made for TV. The not-so-good news is the mode of distribution has changed and will continue to change, forever.

The TV business used to be fairly simple, operating on a linear model consisting of content, distribution and audience, with revenues largely from advertising and/or subscriptions. Networks and stations were able to dictate what viewers saw, and consequently revenues from advertisers. But with the internet, technology and changing consumption habits, the same networks and stations have saw their viewership and ad revenues gradually fall as media fragmentation increases.

For broadcasters to remain commercially viable, it is clear the traditional advertising revenue model, based on linear ratings, has to evolve. But how?

It is worth beginning by looking at some trends shaping current TV consumption habits. Firstly, over-the-top (OTT) content providers, who provide content through broadband connections, are on the rise with operators such as Netflix and Hulu letting viewers watch what they want, when they want, for a fraction of the cost of most cable subscriptions. Secondly, the number of subscribers ditching cable is rising precipitously, most notably in North America. And thirdly, local TV programming is still delivering the type and number of viewers agencies find most valuable for their clients.

In a compact geography like Singapore where TV penetration is at 98.9%, mobile penetration at 149.6% and wireless broadband penetration rate at 194.3%, advertising success is contingent on delivering local relevant content across the range of available media options. To this end, terrestrial broadcasters are in a unique position to offer the combined benefits of these mediums. For example, a story can break on TV, continue as OTT webisodes and be further developed into a mini TV series or telemovie. This way, monetization opportunities can also follow a similar trajectory and allow advertisers to reap the combined benefits of linear and OTT.

So much has been said about digital being the future of TV, but I would caution not to neglect the older, less tech savvy demographic with its disproportionately higher purchasing power. If we subscribe to ‘content is king’ then digital is a platform for the carriage of content.

Over the air broadcasting continues to be one of the most efficient ways to distribute real-time programming to massive numbers of homes, providing greater scale and higher efficiency than most internet video sites especially in countries with bandwidth issues. This is a USP TV networks have over OTT players and they would do well to harness this to their advantage. TV continues to be popular because it tells compelling stories and generates 100% share-of-voice when an ad is being played. For these reasons, we know anecdotally that campaigns that have high buzz value usually break on TV. At the end of the day, advertisers want to use their marketing dollars to reach the highest number of eyeballs in their target demographic.

Traditionally, TV networks live or die by their ratings. This is no longer the case as much of today’s viewing is a combination of linear and non-linear, as broadcasters reach out to viewers through their OTT space as catch-up or advanced viewing. Hence, a more appropriate system of measurement would capture both linear and non-linear views across the various screens. Ratings are important but even more important is a consolidated metrics that helps advertisers understand their investments.

The TV business has weathered major disruptions, from cable and VCRs to DVD and streaming. It can continue to grow but needs to adapt, so new business models will emerge. This is why Mediacorp has formed an alliance with Singapore Press Holdings to create a new digital advertising marketplace with display and video inventory from the two companies’ websites.

Media companies have to be open to dynamic and unconventional collaborations and partnerships, and, as video storytelling evolves alongside consumption habits and technology, successful TV revenue models will be those that leverage the combined powers of linear and OTT and provide advertisers with relevant metrics to measure its impact.

This article first appeared in The Drum's February issue, which explores the Future of TV and is out now.

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